Vietnam's southeast chases investment
HANOI - State-run enterprises in southeastern Vietnam have launched a
drive to restructure production and management systems to optimize the
potential for exports.
Analysts see the southwestern area comprising Ho Chi Minh City and the
provinces of Binh Duong, Dong Nai and Vung Tau as the biggest industrial
center in the country. Most of Vietnam's key industrial sectors, such as
petroleum, electricity, metallurgy, mechanics, chemical, electronic,
garments and agricultural food processing, are there.
Foreign capital enterprises account for a large part of business in the area.
In the first half of this year, while 292 domestic projects were allowed to
invest there, the area's industrial parks attracted 154 foreign investment
projects.
Meanwhile, the national government's preferential policies have not
attracted investment to develop industrial production in more difficult areas
such as those in the southeast, said Nguyen Dinh Sang, deputy director of
Binh Phuoc province's Department of Industry. Sang suggested that
authorities in the provinces of Binh Phuoc, Lam Dong, Tay Ninh and Binh
Thuan set up preferential policies of their own to submit to the Hanoi
government.
According to the director of Binh Duong province's Department of
Industry, the southeastern area's industry sector would develop better if
local ventures received better preference on land, tax and customs
procedure.
At present, investment doesn't match the potential of the area, especially
preferential policies affecting the importing of industrial equipment and
facility.
Insiders suggest that the industry needs to pay more attention to the
training of workers. Phan Thi My Thanh, deputy director of Dong Nai
province's Department of Industry, reports that most of the 80,000 laborers
working in the 10 industrial parks in the province are unskilled. The
province has proposed that the national government establish a center for
training technological workers for the parks.
Meanwhile, the director of Ho Chi Minh City's Department of Industry
remains concerned about the development of a local industry sector in
response to the demand for integration and the approaching international
competition.
A group of local economists say that the state-run enterprises have gained
the advantage in the sectors of food processing, rubber, chemicals,
electronics, shoes, garments, plastic and mechanical manufacturing. The
remaining sectors are controlled by private enterprises and foreign
investment enterprises.
Exporters slow to insure
Experts in Vietnam's insurance industry have warned that domestic
exporters moving to exploit the Vietnam-US bilateral trade agreement
should insure their products.
The United States is the world's biggest market and imported US$1.1
trillion in 2000, compared with the $900 billion imported by 15 European
countries. Experts have warned that penetrating the market will be no easy
task.
The US is new to Vietnamese exporters, who will face risks in the
potentially lucrative but always fastidious market. Indeed, Vietnamese
enterprises wishing to export to the US must adhere to stricter and more
complex regulations on quotas, product labeling, property rights and safety
than in other overseas markets.
And few Vietnamese exporters know what products Americans want,
how American firms do business, what American lifestyles are or whom
they will compete against. The risks are known to Vietnamese enterprises,
who will face fierce competition with the world's best products from 160
other most-favored nations.
Insurance experts said that US export insurance means that losses
incurred by domestic enterprises will be partially compensated, helping
reinvestment and business development should the worst occur. However,
domestic enterprises' insured exports to the US are still limited, and not
proportional to the country's volume of commodities annually exported to
that market.
Pham Chau Loan, a Vietnam Insurance Co (Bao Viet) official, said that
Vietnam has insured only 10 shipments of exports to the US.
Meanwhile, domestic businesses have to date exported a wide range of
products to the US, including coffee, rubber, tea, crude oil, rice, pepper,
cashews, seafood and textiles and garments, with total export values
reaching nearly $733 million in 2000, she said.
Insurance experts attributed the delay in insuring export products to
domestic enterprises' lack of awareness of the need to insure.
Most Vietnamese businesses often complete free on board (FOB) and
cargo, insurance and freight (CIF) forms when they export and import.
"Under these forms, enterprises hope to avoid risks, but the downside is
that they are not able to fix their prices export or import products as they
would like," argued Le Phong Son, an official at the Bao Minh Insurance
Co.
The fine print on insurance contracts has also made domestic exporters
shy away from insuring their exports. Domestic insurance companies need
to educate exporters about the importance of export insurance, and also
about available insurance products, experts say.
They also suggest that insurers consider tailoring insurance provisions and
premiums to the changes in global and regional economies.
Asia Times - November 10, 2001.
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